Suppose the returns on long-term corporate bonds are normally distributed. The average annual return for long-term...

Suppose the returns on long-term corporate bonds are normally distributed. The average annual return for long-term corporate bonds from 1926 to 2007 was 6.7 percent and the standard deviation of those bonds for that period was 9.4 percent.

(a)

Based on this historical record, what is the approximate probability that your return on these bonds will be less than -3.6 percent in a given year? (Do not round intermediate calculations.)

(Click to select)14.21%12.98%13.66%14.34%27.32%

(b)

What range of returns would you expect to see 95 percent of the time? (Do not round intermediate calculations.)

(Click to select)-12.10% to 25.50%-21.50% to 34.90%-11.49% to 24.23%-12.70% to 26.78%-4.00% to 22.80%

(c)

What range would you expect to see 99 percent of the time? (Do not round intermediate calculations.)

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Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 4 months ago

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